Buying a home is one of the biggest financial decisions you will make, so it is important to know your current financial situation to be sure that you buy a home that you can afford. Talking with a mortgage broker and reviewing a Home Buyers Report can help you learn more.
House prices in the Toronto and Vancouver areas accelerated in April from already rapid growth levels, prompting one analyst to warn of an “affordability disaster” in those cities. At the same time, the Teranet/National Bank house price index, released Thursday, showed prices are actually falling in many other Canadian metro areas.
But powerful house-price growth in Toronto and Vancouver pulled up the overall national index by 8.1 per cent, the strongest price growth in six years, National Bank economist Marc Pinsonneault said.
What Pinsonneault sees as a housing boom looks more like a crisis to Capital Economics’ senior Canada economist, David Madani. “In Vancouver and Toronto, the acceleration in annual house price inflation to 19.8 per cent and 10.5 per cent represent housing affordability disasters from the perspective of potential home buyers,” Madani wrote in a client note Thursday.
“House prices are completely detached from household income fundamentals. Speculative investor demand, only partly from foreign cash buyers, continues to drive house prices into the stratosphere.”
“The growing bubbles in Vancouver and Toronto continue to defy economic fundamentals,” he wrote.
“It’s possible these bubbles will defy gravity until long-term interest rates begin to rebound, but there is a growing possibility they will simply collapse under their own weight.”
But Pinsonneault points out there are reasons for why house prices in Toronto and Vancouver have become so detached from the rest of the country – these two cities are driving most of the job growth.
“While some will keep blaming foreign capital for the housing boom in Vancouver and Toronto, it’s worth noting those cities are also blessed with the strongest labour markets in the country and hence are able to accommodate large migration flows,” he wrote.
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http://www.huffingtonpost.ca/2016/05/12/affordability-disaster-canada-housing_n_9934980.html
